Saturday, August 11, 2012

Signs of stress in BTL

Buy-to-let repossessions at record high

You will need to regsister with the FT to see this article. The FT has looked at data from the Council Of Mortgage Lenders and found that the proportion of repossessions that were for BTL properties rose from 10 percent in 2009 to 19 percent during the first half of 2012. I'm not sure what to make of this data. Are banks showing less forbearance to BTLers compared with residential households or is the BTL market rental income declining due to arrears? The total repossession rate for BTL (repossessions in total number of mortgages) is a record 0.24 percent hence the headline.

Posted by quiet guy @ 01:43 PM (3834 views)
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7 thoughts on “Signs of stress in BTL

  • Google search:

    “Financial Times: Buy-to-let repossessions at record high”

    And you can read it without registering.

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  • charlie brooker says:

    My heart bleeds.

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  • Mine doesn’t. People need to be accountable for their actions, and lose money when it doesn’t work out…..as much as successive UK socialist governments want to bail out the profligate.

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  • There’s more detail from Savills’ Neal Hudson:
    Neal’s UK Housing Market Analysis

    Savills are quoted as saying:

    Factors contributing to the rise in buy-to-let repossessions included a lack of forbearance from lenders and higher mortgage rates. Buy-to-let properties also tended to incur higher levels of arrears because tenants defaulting and landlords not making provision for unexpected maintenance costs.

    So in other words, landlords themselves are treading a thin line; and banks are charging them higher rates than for owner-occupiers, even though historically landlords have actually been less likely to default (see graph in above link). Just goes to show: banks are stupid.

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  • I went to an auction recently. About 15 local properties from one BTL landlord were being repossessed. Took the bank 3 years to obtain court order. Then all listings withdraw last minute, because the landlord managed to find a loophole and lodged a legal challenge. Just unbelievable. It is too difficult to repossess properties in this country, not the other way around.

    Forbearance is bad business for banks. it’s like being forced to keep playing the cards to lose when you know you have already lost. BTL mortgages normally have at least +20% equity, so they are the ones that banks can actually recoup the loss when repossessed. Banks would love to go after those. BUT, the absurd UK court system has been treating repossessing BTL properties with the same reluctance as if taking away adopted children (homeowner repossession being treated as if taking away first born children from parents). It’s just brick and mortar for fxxk sake!!

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  • BTL has grone from 5.5% (2005) to 12.6% of mortgages. In other words they have a higher percentage of the more recently purchased properties (ex remortgaing etc). Therefore if everyone was treated equally (fairly or unfairly is a different issue) then you would expect a higher proportion of BTL properties being repossessed.

    ‘course that a quick and dirty analysis. but makes sense to me.

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  • mark wadsworth says:

    Techie, that makes perfect sense.

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